AUD/JPY Price Analysis: Symmetrical triangle advocates a volatility squeeze
- The risk barometer will remain sideways on symmetrical triangle formation.
- Investors should brace for a volatility contraction, which will be followed by an expansion in the same.
- A (40.00-60.00) range oscillation by the RSI (14) adds to the consolidation filters.
The AUD/JPY pair is displaying back and forth moves in a narrow range of 93.80-94.01 in the Asian session. Earlier, the cross witnessed a minor rebound after hitting 93.50 on Wednesday.
On a four-hour scale, the risk barometer is auctioning in a Symmetrical Triangle pattern that indicates a squeeze in the volatility, which is followed by a breakout in the same. The upward sloping trendline of the above-mentioned chart pattern is placed from June 23 low at 92.65 while the downward sloping trendline is plotted from June 21 high at 95.33.
The 20-period Exponential Moving Average (EMA) at 93.95 is overlapping the asset prices, which signals an ongoing consolidation in the asset.
Also, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range, which signals the unavailability of any potential trigger and eventually volume in the counter.
A decisive break above Tuesday’s high at 94.72 will trigger the symmetrical triangle breakout and will activate aussie bulls for an upside towards June 21 high at 95.33, followed by June 7 high at 96.15.
Alternatively, the yen bulls could gain control if the asset drops below Wednesday’s low at 93.47. An occurrence of the same will drag the asset towards Monday and June 14 low at 92.98 and 92.43 respectively.
AUD/JPY four-hour chart
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Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
